Financial technology (fintech) is a fast-growing segment of the broader financial sector, and the revenues generated by companies in this sector can be enormous. According to BCG estimates, the global fintech market will reach $1.5 trillion in revenue by 2030.
That’s just an estimate, of course, but it’s a good indicator of why companies are competing to be at the forefront of new fintech services. Two such companies that are already well-placed to benefit from fintech growth are Sofi technologies (NASDAQ: SOFI) And PayPal (NASDAQ:PYPL). This is why.
SoFi has expanded rapidly over the years, adding new services and financial offerings, which now include loans, investments, checking and savings accounts, loan refinancing, credit cards and even estate planning.
To put SoFi’s growth into perspective, consider that the company had over 1 million members at the beginning of 2020. In December it announced that it now has more than 10 million members – a ninefold membership growth in just five years.
SoFi’s strong membership base has translated into impressive financial results. The company increased third-quarter 2024 revenue by 30% to $697 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 90% to $186.2 million.
SoFi shares have soared over the past six months and are up 137% at the time of writing. The earnings have driven up the premium for SoFi’s shares, which now have a price-to-earnings (P/E) ratio of 74. That’s expensive anyway, but starting a small position could be smart for long-term investors looking to own a piece of a fintech leader.
Some investors may overlook PayPal when looking for fast-growing fintech companies, but this major fintech player likely has more growth ahead. The company’s personal payments app, Venmo, is a good example of how PayPal is willing to look at new areas of growth. Venmo is one of the leading payment apps, with an estimated 88 million users, up from 52 million in 2020.
PayPal’s revenue rose 6% to $7.8 billion in the third quarter of 2024, and non-GAAP earnings rose 22% to $1.20 per share. It also ended the quarter with $1.4 billion in free cash flow and $16.2 billion in cash and cash equivalents.
The company’s 432 million global users are a testament to PayPal’s leadership position in fintech. The 9% increase in total payment volume in the third quarter to $422.6 billion proves that the company knows how to get its users to continue using its payment platforms.
